[Music] Welcome to Lunch Money. Lunch Money is the online and social media home for special situations. Work out some capital raising professionals, and we hear at the World Exchange Club having breakfast, and talking about heavy haulage, heavy challenges, financing the transport industry. I guess one of the reasons that we're doing this seminar today, we're kind of working our way through the industries. We did construction and mining a little bit earlier in the year, and we've got manufacturing and other industries coming up. But we certainly have our fair share of transport clients at home, so I was saying to Catherine, I think, yesterday or the day before, that all of our payments in one day seem to be transported. We have a transport of clients all around the country, and they certainly face different challenges. There's challenges, one of the challenges that we've found, and I don't know how many of you finance transport companies, but during COVID, you couldn't get hold of a new piece of gear. You couldn't get hold of a truck, you couldn't get hold of a trailer. These things were rare hands deep, and we all know how supply and demand works, they're usually enough. Now, some of these things, you can barely give them away, particularly the older ones. During COVID, you had a 15-year-old trailer, it was like gold. But now, because of the way the supply chains got messed up, on top of that, because there are a little bit of tension in the transport industry, fuel suppliers, and other suppliers in the industry are cracking down a little bit. Of course, we've had the ATO invading small business lands like the Visigoths invading the Roman Empire. They've just gone mad on small business. We've got a fantastic panel that we've put together for you. We've got Ben Gibson to my left. Ben is head of advisory at Pecos, and you've sold one or two trucks in your time ahead. And on the far left here, we've got Luke Andrews, who's a restructuring and insolvency partner at VDO, and I guess happily for all of us here, because he can share his experiences, but I'm happily for some businesses who have been involved, so I'm there to some fairly tricky transport industry insolvency. I mean, not happy. Not just for the lawyers, that's it. And then we've got Roman Tevez from Balanced My Books. So Roman is a business advisor and gets called in when companies get a little bit messy. Hopefully, sorry, Luke, but hopefully you can sort them out so they don't need Luke so much. And he's got a couple of large transport companies on his books that he gives for us to, and helps keep them in order. So I'm just going to go sort of up and down the panel and ask my first question, which is introduce yourself and tell us about your interest specifically in the rate transport industry. So I started with you, Luke. Yes. Thanks very much, Nick. So I am, as sort of Nick slowly mentioned, I'm a partner of VDO in the restructuring division. So we do focus on those turnarounds. Also, sometimes when there's a balance sheet issue, really that's the key of when we're talking about restructuring. There's a key to it is that there is a balance sheet issue. Might have been from an underlying performance issue. Sometimes it's through shocks, but fundamentally that's what we're talking about. So I've been in the industry for about 20 years. It's also spent some time at one of the big four banks in their turnaround workout, which really sort of set me up in understanding how a financial looks at it, particularly around the sort of the majors. And in particular around the transport, I've had a number of assignments over the last sort of 12 months. It seems the industry's been a little bit more challenged from what I've been involved in. So, yeah. And I think me and at the moment, Ben are involved in one together, which is one of those ones that I'm not quite as happy. But Ben's been helping out a little bit more. All right, Ben, so we've not getting too much of an edictory because we'll get to all of that. But just to introduce yourself and your interests in the transport industry. Yeah, so Ben Gibson, 30 years, makes me sound old. Billy has been around as long as you think. A career option here at Valuer. I had up the advisory division for Pickles. So Pickles are by far and away the largest option is value as equipment. In the country, we sell around about $3 billion worth equipment every year. Motor vehicles, transport equipment, construction equipment, mining equipment, agricultural equipment. From in the transport sector, truck machinery is probably one of our larger divisions. We sell around about 42,000 transport assets every year. So that gives an incredible amount of data. We've got a team of, well, our business, we have about a nine-up of people around the country. We have 30 full-time value of us, so are all the bank panels, all the financial panels. Second tier, third tier, financial panels. Yeah, so we produce those valuation reports. Then in the case, sometimes when they're going through a restructure and they can't be sold, or going concerned or turned around, then I look after the sale of those assets. But the advisory division is only one part of Pickles. We've got a whole bunch of sales scholars in there that sell equipment for transport companies and the machinery companies. We sell for the tolls. We sell for the Lin Foxes, all the major transport companies around the country. We have contracts with them to sell their surplus gear just in the normal course of their business. So as trucks and trailers get older and they need to replace their fleet, they can plus, we've pretty seldom looked at the secondary market. I guess you're also doing a balance sheet, your valuation is $7.00 or so. Yeah, we are. So we probably can get into that a little bit more. But we've had to find ways which has kind of helped our relationship. Nick has in terms of ways that we've been able to leverage off our balance sheet and our knowledge and our data to provide some sort of equal lenders or funders around tricky situations and particularly in trends. I'm pretty sure that probably two thirds at least, probably everybody has had Pickles valuation across their desk at some time. It might make them small sometimes, but sometimes they must get a little bit disappointed. That's the nature of valuations. All right, Ron, tell us a little bit about yourself and your interests in transport. Yeah, so I can't be asked my books. Swedish clients coming to us, basically, they're in two positions. They're either saying, "I really don't know what's going on in my business. I don't know if it's profitable or not profitable." What's going on? All they come to us and say, "We've got a cash flow problem. Why do we have a cash flow problem?" And more often than not, it's not a cash flow problem. It's a profit problem. And then we try to work out what's going on in the business to try and get them on the right course. Before we have to get people into the picture. But hopefully, we can get people with a picture earlier in the face and get ourselves out of the position. And we solve the solution by typically speaking, their account seems usually not a dispatch. There's no accountancy. Is there any accountancy? Well, we actually work with accounts. Typically, accounts provide compliance assistance. Are we paying tax? Aren't we paying tax? We don't deal with that at all. We love accounts. We like working with them. Our job really is to get the bookkeeping function, the accounts payable receivable, and payroll functions out of the hands of incompetent people and make sure that people don't know what they're doing. And from that, it actually makes getting loans and all those other things much, much easier. So that's our function. OK. You've got a couple of... You've got a book. Yeah, we do. We do. Right. We do. We do. And they're not bringing you up because they're having a great time. They're bringing you up because they're having a great time. They're bringing you up because they've stuck their toes. Certainly. So typically, that's where it's at. And it's happened. Yeah. Really not knowing what's going on. And I love the comment, "I've got a cash flow problem." Well, do you? Yeah. Yeah. OK. All right. Well, I said before about asset prices, sort of being a little bit disappointing on the downside, say the least this year. And then I know that one of the things that you always talk about whenever we talk about pickles is the data set. You're really proud that you've got a massive data set. And so tell us, you know, what the hell is going on with asset prices and transport? Yeah. I think you, in your opening, you really summarised it quite well. You know, I mean, at some stage, I guess we won't talk about COVID, but it's topical in that, you know, asset prices were through the roof. You couldn't get quality assets, huge wait times for new equipment. And all of that kind of worked towards a couple of years ago during that COVID period of asset prices going through the roof. But what we've seen since then as a whole, a lot of those supply chains have normalised. And supplies come back onto the market is that asset prices, prime move as rigid trucks, semi-trailers, have all trended down and actually quite sharply. Some of it's a bit, it's just normalising, going back to where it should have been pre-COVID levels. And up until probably six weeks ago, I was a little bit concerned about how quickly prices were dropping and some of the things that we've seen coming through. But our August clearance rates, our August numbers seem to have kind of stabilised a little bit. So it may well be that we've kind of got to the bottom of that. We're back now to the new novel. But what we are seeing in some of the distressed scenarios that we face is that people that have financed equipment sort of two or three years ago at the height of COVID have had to pay absolute top dollar, but even for second-hand equipment. And now they've found themselves in sort of trouble and they're still owning a lot more on that equipment. The more it's actually worth, and normally you'd expect after three or four years that you probably, you know, you started to build some equity in the equipment, but because the prices have been trending down, it's quite often not the case. And if you multiply that, it doesn't sound too bad. You know, one truck or one trailer, but if you multiply that across a fleet of a couple of hundred units, it's a really significant downturn. And I'll just say that we've got to project our voice because we don't have a professional photographer here just to make sure we capture everyone on our microphone. I'm told that there's, you know, U.S. trucks are holding up better than European trucks, and maybe they're refrigerated, it's not as good as, you know, some of them right away. Yeah, just give us some insight. And that's true. Kenworth, you know, most of you will know Kenworth are prime moves, but they remain really strong. There's been, there's kind of been a world publicised in relation to refrigeration equipment, well publicised receivership of Scott's refrigerated transport, and that threw an enormous amount of refrigerated equipment onto the market. And we really saw that have an effect. Hopefully that'll stabilise now as we're starting to come into the warmer months, hopefully demand will pick up on some of that stuff. European prime moves have been relatively soft, and as have some components of kind of the rigid trucks, and those kinds of things. Yeah, so it's a bit of a mixed bag. And one of the key things that we always say in your dealings with transport clients is really try to understand what their maintenance schedule is and what their reputation is around their gear. Because it's absolutely, you know, key, we're going through a little bit of that, be thumbed with Luke at the moment, and it's OK if the equipment's relatively new, but if it's not, it's not being well maintained, you really feel that at that back end it's time to... Yeah, well I mean one of the problems as a financier is if someone's having cash flow issues, then maybe they're not going to take keeping up their maintenance schedules, and then the trucks are deteriorating in value. You know, we say that, you know, what happened here? You know, you've valued it for X, you know, the thing hasn't been serviced in the way it is, you know. And another, of course, the biggest nightmare for one of these, not less touched whether they bring it on by talking about it is, you know, there's 20 trucks, but five of them are in workshops. And you can't get them out unless you pay the workshop for the engine that's blown up, that they're replaced, and the rest was up. OK, so Luke, what, from a restructuring perspective, when you're all getting involved, I guess you get involved, because banks get you involved, because directors get you involved. I mean, what are the common issues? Now I know people say cash flow, they say the ATO, but there's always an underlying issue. Yeah, yeah. So the acceptance, that's not the cause. Obviously, so there's always a range of issues, but if we're talking about leverage and how they got themselves to this situation, generally, you know, some of the biggest traps I see is the types of equipment that they actually go for, and whether the underlying contracts and routes support and sustain that. So sometimes we end up seeing, but therefore, the newest, most expensive schmickers gear, but ultimately it was for routes and contracts that are actually not making money. So you end up looking at, end up becoming an operational fleet management issue. So are they actually getting the right gear? And this is where you end up partnering with people like people's, and understanding what sort of equipment you can actually get, and at what values, but fundamentally, it has to be the right equipment to the right routes to sustain it. So that's some of the traps I've seen, which ultimately, if you put this in a sort of property sense, it would be called over capital ones. So that's a really common thing we've seen, and also floating with that is quite often an inability to collect debtors really well, and sort of end up showing that the evidence, because we've seen in so many circumstances, there's debate and dispute between the customer and the client, which is normally our client. And so some of their processes and systems really need to be a lot better than the more we're seeing. So they're probably some two key underlying issues that we say, because nearly everyone that you would see too, because I know what we do about it, or we spoke about it, but the ATO piece is such a big thing. I mean, we said that that's a symptom, but it's rare that you see someone that doesn't have that ATO issue that's going to come out of care or whatever. Yeah, exactly right. It's the unofficial bank. Yeah. So I think it's competitors. Yeah. Well, people always laugh, but it's a fact. You know, I had a deal land on my desk yesterday, and, you know, I'm trying to let me see. They turn over maybe 60. ATO, they said a little. You know, it's a fit. Yeah. It's a change. Yeah. So you would say it's interesting with it when it comes to roots and the profitability of each truck, almost. I know that, you know, finance brokers, they're, you know, they're pitching a truck to, you know, want to get some finance. Sometimes, I guess, serviceability is always the thing, and sometimes there's some serviceability. You don't need to talk about it. Yeah. Sometimes it says this new truck will service because here's the contract that's going to attach to it. But of course, we had, you know, a lot of the latest engagement with you, Luke, was a client, a transport company, and they were trying to change your accounting systems, and it was a train wreck. I don't think their customers didn't want to pay. Their customers just wanted to pay the right bill. Yeah. So certainly. Yeah, it's a reconciliation. Yeah. And if you don't have those systems, it's a place. You're, you're, you're not costing yourself a lot from time and money. Yeah. Actually, just trying to justify what's done and explain it to your customers. And I think there's some of those, some of those contracts are being difficult too. And that's a whole other issue as well when you, when you're funding and you're financing. Yeah. It's going to be based on the security or the tenure of your contracts. And getting some of those long-term contracts are really difficult. Well, well, well, I mean, before I segueing around, he's already been probably championing a lot of stuff a lot of stuff. Yeah. But I know I've got a friend who has had logistics for a very large FNG, plus moving goods company, and he was tendering out the transport. And they're demanding 120 days. Trading? Yeah. You know, and so it makes it very hard. You heard what Luke said there about accounting system. Absolutely. That's that's right in your value. Yeah, it is. A big problem in logistics is, frame logistics and tree bill. The software that they're using is typically speaking very, very concrete. It's either a very large ERP, or alternatively, they're trying to do things in a simplified virtual zero, but then they're using, you know, transport products, or transvirtual, or whatever the cash might be to do what they're doing. And the two don't communicate very, very well. And then they have a receivables issue that becomes a problem because they're not matching purchase orders with invoices. And then it becomes a dispute. And more often than not, trying to get the money ends up coming very late in a cycle and we've already been forgotten about 30 months ago. Yeah. So, creating post-assistance, where we try to recover the money quicker, and not having a large receivable portfolio is usually key. And then you know where your position is as well. Well, I've always said one of the great things about receivables finance, or funny receivables, receivables are the entrails of the business. Correct. Where it's where all the problems show up. Absolutely. And I know, and I've got, you know, Catherine and General Manager here, and probably Harry over there with the sympathizers as well, you know, where there's a debt that's gone in the 90 days. And we get involved, say, and bring up the customer and, you know, why haven't you paid? And I say, listen, I have called Frank our client 20 times and asked for that credit no, or the POD or whatever it is. It's not there. And I'm not going to pay until they sort it out. So you see a fan of that? Too much. And typically speaking, the issue is again, and, you know, in common, we were just finding jobs by calling customers to client pickings, where we like to automate prices. A lot of the time, we'll actually bring in software that will automate things like reminder mechanisms, your debt is due today, and really focusing on getting things not into an overdue state. Once in an overdue state, it's really too late. I love funding the due money. I think that is a great way of making sure that, you know, that you're keeping on control, but you should never be funding overdue money, because that's costing you. And that's silly. I hate that funding overdue money. The other thing is yesterday we had a cup of coffee, and you were sort of maybe half-choking or lamenting quick books, and zero, and M-Y-O-V, and on one hand, they supposedly make life easier, but they just can't help you to get into a mess quicker. Yeah, absolutely. They simplified the program so much that anyone thinks it's a second driver, which is absolutely right, you can. But to drive at the level is very, very different. So having competent drivers behind those pieces of software is extremely important. Anyone can be able to keep it these days, frankly speaking of a cash payable, cash receivable companies with those consistent in place. ERP is different stories. They're a little bit more complex, and yet the driver needs to be quite diverse. Things like zero in particular, it's counting the domains, it's fabulous program, but it opens up during conferences quickly into your business. Well, another issue that Luke and I encountered recently was they're asking very schmick, online, so in the cloud, solutions. But then if the customer's only half implemented, and they're still running the old system, and it's viable, whatever it is. So you've got this solution, and they're running two tracks. Yeah, and that's one of our clients, we're a big problem because I'm saying, "I'm profitable, I'm profitable." And they're saying, "Well, how do you know you're profitable?" Because when I run normal, my numbers are transvertual. All my runs are saying that they make the money. So they take, and then we compare what's in transvertual to what's actually in their accounting package, and that you didn't make. So it's like, "Well, actually, no, what your pain is very different, and your revenue strength is not for your revenue strength, so there's a gap, and all of a sudden, what they think is their probability, is it looking at an operation sort of thing, actually isn't. And that's sometimes timing, but more often than not, just purely the system not being up the scratch of today. Yeah. All right. Okay. Well, Ben, tell me, how do you, how do you at Pickles, you know, with pitching, obviously, with finance brokers, how does Pickles, and how do you engage with finance brokers, what are the scenarios that they're getting involved in, and how do you able to sort of help them in capital raising scenarios? Yeah. So a few things there. Normally the first instance that we're involved is obviously the valuation piece, and, you know, being on all the financiest panels means that if you're getting a valuation for us, you can then take that and use that for your funding. But we've also, for the last number of years, developed quite a few products, sort of credit enhancement type products. So we've got a number of our financiest we've provided. We call them RPGs, but residual value guarantees. So we've got a whole, I'll give you an example, the Coles delivery truck. That brings your online groceries to your store. A whole bunch of those. They've obviously been financed, and then we put a residual value guarantee in for that financier. So at the end of the facility, they can either take us up on that guarantee, or they can go and sell the truck or do whatever they want with it. So, and then more recently, we've developed another product. It's called a guaranteed future value. This is some of the stuff Nick, you and I've been working on, but essentially, there's an ability over the life of the facility with a financier, and we'll underwrite, we'll guarantee the value of that fleet for the period. So it obviously tracks down over time, but we'll guarantee a value on day one, and at any time, through that period, if the financier was to call on that guarantee, we'll pay the money and take the equipment back. So yeah, really just kind of giving some more certainty, and we've seen quite a lot of changes in the industry. Yeah, certainly isn't that distressed or kind of non-traditional bank land over the last kind of five years with a whole lot of alternative funders, although you've been around, obviously Nick, for longer than you were the trailblazer. But it's obviously, you know, there has been a bit of a move away from the traditional banks for various reasons. And so we at Pickles had to come up with a solution where we could be part of that industry. And so the guarantees, because we've got this enormous amount of data, but very confident in our ability to value equipment, transport, construction, any type of equipment. It was a way of us offering this credit enhancement service to our customers, which are, again, most of the financiers that operate in the country. And look, a firm has been the EDO, obviously has a engagement with banks. And so do you have much involvement in pre-lending? Yes, so we do get involved in sort of the pre-lending D/D. And we also, I guess, have the expertise within our full-service accounting firm. You end up being, when you've got specialty sectors, obviously, we're talking about transport now, which I've been involved in. But when you have these really specialised segments, like, for example mining, you know, any, you know, firm-sized BDO, you can really call a fine scientist industry expert. So, yes, it is a common service we provide. And is there a way that finance brokers can assist you in that process? You know, if they put a deal to the bank and the bank needs a pre-lending review, is there any way that a broker can engage with you to make your life easier? Yeah, look, I mean, ultimately, the finance broker really assists with the understanding of the finance element to it, how the bank will look at it. So, in that, we've actually partnered. What ultimately the pre-lint is looking to achieve is that confidence around what's going on in the business, outlining what it looks like, what the sort of forecasts look like. So then the financial can have some of the hang-me handle and hang the handle up so far. So, yeah, in the end, it is a partnership that works well. And Roman, I guess, you know, would you ever find yourself, you know, someone's given you their shoe box all of receipts in the accounting, but they need to raise money for an extra five trucks, or something, and maybe the finance broker's saying, "We need to set it up so we can lift it up." And certainly, I mean, that's usually part and parcel of that conversation. And it wouldn't be as bad as a shoe box anymore these days, but I need to look at my emails, find those invoices. That's probably the equivalent of the shoe box these days. And it's just that sorting it out and trying to get some comfort. And most of it's sitting in the bathroom and being able to be quite honest with you. So, yeah, I'm guessing that, yeah, people are picking up the phone shoe because they've run out of money, probably. I mean, that's usually, I find, I mean, I guess certainly Luke would probably agree, if they've got us involved six months earlier. But I guess it's when, unfortunately, you know, it's human nature, and that's only when the bank balance is really low. Correct. Sometimes that's because, you know, they're receivables, it's genuinely blown out. There's issues there and how they collect money there. They're quick to pay for very slow to collect. And there are those kind of issues. And so sometimes it is they're a profit business or a healthy business. But they just need support, they need some help. And, you know, the owners funded the business up to a point that they can, and they've run out of money, you know, but to be able to continue to fund the growth of the business. Yeah, and I think there's good problems there. Yeah, I mean, I guess in our business, you know, we get a client that needs an increase in limit. And the first question we always ask is, you know, the ledger's growing. And the first question I ask is, is it growing because of more sales, which is great? Which is great. Or is it growing because you've got the same level of sales, but they're just not collecting, which is great. And, yeah, I mean, growth, you know, as you say, it's a timely issue. Correct. They're getting paid, even if they're getting paid on time. So it's got to be that. But their fuel suppliers, a lot of, you know, a lot of fuel suppliers want to get paid this week. Absolutely. So, so, so talking about fuel suppliers, Luke, we just might get on to sort of stakeholder match. You know, in the transport game, obviously, I guess your key stakeholders side from the owners of the business. And, you know, there's the leasing companies that advance the equipment and might be, you know, there's fuel companies. Yeah. There's the ATR. I mean, how do you go about managing all those people? Yeah, it's a good question. And the reality is, obviously, full circumstances are different, but really, if I boil it down to a few key principles, really, in the end, you remember, you're dealing with human. So if I had to summarise from all my experience, you know, what were the key sort of precepts and principles that actually make a successful sort of stakeholder engagement strategy? I'd say the first one would be actually detailed analysis. What is the issue? What are the facts of the scenario? And with that, I think you end up saying, okay, we know what the facts are, but what's our story? Okay. So the second one is, what is our story? Because in the end, we're going to have to be telling people what's going on. And, you know, Nick was sitting there saying when I've got a request for an increase in limit. First thing I'm doing is ask questions. So again, what is the story? And you've got to have that clear. And then the last key plank in a very simplified sense would be ultimately transparency. So what are we going to do? And obviously, there are levels and limits you have with different stakeholders. But that's the key principles, because really, ultimately, you're attempting to build trust. And if the story doesn't match up with facts, the analysis, then you're out of sync there. And you're not likely to be building that trust. But what keeps and maintains that trust is actually being honest and saying, well, we've got a story here. It might be we've lost a key customer or actually our accounts right now aren't up to scratch. And we're going through our process and our progress to actually improve that. So we can collect cash, click on it. But really, they're there to keep fundamental principles. Again, I'd just say you've got to get your facts straight, which is all about analysis. You've got to understand what the story is and how you communicate that. And then you've got to keep transparency because you need people to be patient. You need people to be forgiving sometimes. And that is, people are only going to do that when they sit there and look at you and start to cut out trust. But trust, what's going on? Do you have a application to be speaking with the leasing companies in person? Yeah, we do quite a lot. So one of the things that we've seen, you know, kind of in that liquidation or administration scenario, particularly, this is really relevant kind of over the last six months. Well, so if we take a step back 12, 18 months ago, the liquidation came in with a fleet of vehicles, transport equipment or any type of equipment, to be honest. It was quite often that there was equity in the equipment. So the liquidator wouldn't disclaim it. They would sell all of the fleet, be able to pay out all of the, and sometimes in these scenarios, as you guys, I'm sure, would well know. You know, one company might have six or seven different financiers involved that have financed different pieces of kit. But what we're seeing at the moment, because we've had that trending down in pricing, most of the stuff is underwater. So it makes it interesting for us. So when we get one of those kind of, you know, big liquidation sales, often we've got a liquidator who's kind of our primary client, but then we're also dealing with three, four, six, as many as 10 different financiers, all on the same fleet of equipment. And that's not unusual. And what about, let's sort of clip it to the sunny side. Because I know there's a couple of groves in the room that I know specifically get involved in some, I guess, merge some acquisitions or change acquisitions at the SME level. I mean, and obviously you get engaged to look at the asset piece there. What, how are you able to help brokers with their communications with the lenders, because obviously the brokers want the deal to get done. And how are you able to sort of assist in those discounts? Well, I think hopefully that most of that comes through our contacts through our reputation. You know, like I said, we're on their panel. We hope that they've posted them, consider us a trusted partner rather than just a service provider. We, because of this enormous amount of data, we go to great lengths, not only when we provide valuations, we give commentary around it. We've got market updates that we kind of put out every quarter. We've just had a recent one come out last week, which I don't think I've said to you yet, but it covers off all kinds of the major sectors, covers off transport, mining, ag, motor vehicles. So... Who do you send that to? We send it out to our clients. Yeah. So... There's a finance break in the morning. Yeah, absolutely, yeah. And just contact me after this and very happy to send it around. I just give you some colour, you know, sort of stuff that we've talked about, you know, today. I get you to understand that, and then because we're dealing with those finance years on a daily basis, you know, hopefully we can put you in touch with the live person or, you know, talk through, you know, what we're seeing. And I think just while we're on that kind of mergers and acquisition component, you know, sometimes in those scenarios, particularly if it's a semi-disressed acquisition, that's where the asset-based lending piece is probably, you know, a really big-to-purpose type scenario. So, you know, maybe they've lost some contracts, maybe they're going through some renegotiation up, but we're fighting with a lot of our key clients that some of those contracts that used to just come through, supply contracts, just sign them and send them back straight away. They seem to be taken forever now. So, we would not be alone with a whole bunch of businesses out there that are kind of in this limbo. You're still working for your major contractor, but you're in negotiation, and you're not actually having got a signed contract at the time. So, I feel like we, hopefully with asset-based style lending, a little bit of that can be put to the side, because we're going to give you some certainty around what the asset is worth, you know, what's case scenario, and perhaps there's an ability to less rely on, well, I haven't got, you know, 678 long-term contracts there that are all signed and ready to go. Some of them are in negotiation, but I know I've got, you know, decent fleet of assets here that's got to be worth something. Okay, and Roman, sort of just stepping back to the stakeholder management, communicating with maybe fuel suppliers, financiers. If you've got much experience in that, what sort of sort of... Look, most of the time the relationships we sort of stay back from, particularly quite often, because typically the stakeholders have those relationships in play, and moving those relationships is often quite difficult. So, where we see opportunity between clients, where we see better deal elsewhere, then certainly we will grow to introductions of what are most part. Those things are long-term deals, long-term relationships, and they're typically hard to shift. Okay, all right, well then, so what I'll say is, if anyone's got a question, just throw your hand up. But for Ben and Luke, in relation to your pricing on the guaranteed biotech position, I mean, that'll lay our ears for that to mean. You have a lot back in the day, the line in the string cycles. How do you advise that what does the customer cross? What's the cost for the customer to pay up front to you? Or do you take a clip at the end of Luke? How much is your worth? Variation, cost divided section, even though you're probably involved in a small deal to deal with it. So, there's a nice pricing. It's a good question, and that would depend on a lot of things. In terms of doing an actual evaluation, that's sort of a different error business, some sort of more restructuring, but we do have that radio obviously. But in terms of pricing, generally, we'd have to sort of understand more with business, what's involved, and rest of it. I'd say if you've got a specific scenario, you're going to be happy to be able to. I think, I mean, people's life experience, it's a few points, it depends on the deal. Yeah, it depends on it. It's normally an ongoing fee for the, depending on the length of the time for the guarantees. Yeah, so it'll be a percentage point. But again, it depends on the assets, the transport assets we love. So we think it's pretty competitive there. We do it. We love motor vehicles as well. So, most of the guaranteed buybacks that are offered by, it appears to be the OEMs. We actually sit behind a whole bunch of those. You take a, I won't give a brand, I won't give away who our clients are. But you make a purchase of a new motor vehicle in three, you can go guarantee buyback. There's a sink in 10 chance that that guaranteed buyback price that you're being given is provided actually by people's buyback. Yeah. All right. Any other questions? Just throw out the hand. Rob? A quick one for Rob, I hear from, I work in the SME space with clients, particularly to know that a lot greater than five million, so it's at that to the bottom. Yeah. What I find there is most lenders will now look at, plug in the banking system and get the data that way. Yeah. It's going to become very popular. Yeah. Well, I hear exactly what you're saying about, in why are they in zero, and they seem to have taken out the industry. And it doesn't really work for everyone. And I can see how it probably wouldn't work in the, in the ground for industry. I'm assuming you probably use a system that's not one of those for your TBA accounting. The question is, how has that been received by sort of the finances? No, typically we love zero. So let's not walk away from that. We've been zero is an absolute fabulous product. So that's out of four, especially four estimates. And that's our bread and butter for the most part. Right. So I would say 90% of our SMEs are on zero. Yeah. Quick books and not M.I.B. taken off the other states. Yeah. So, yeah, please don't misunderstand that. The problem is that people driving the product. Right. Not understanding it. Often in those kind of businesses, it'll be white or, you know, this rather that's a bookkeeper and does it somewhere else. And that's what you know training. Correct. Or they do have it, but it's, you know, it's like, yeah, I'm a plumber. But are you a good plumber? Right. And they're the issues that we find. Right. So I think the business doesn't get the insight that it needs. And then they get themselves into trouble because they're making decisions based on that. Right. Garbage starter in, garbage starter out. And that's the issues that we often face. So I think probably the underlying issue in what Robin's asking is that a lot of lenders, not us, but a lot of lenders are getting their data directly through these bank links. Yes. As a matter of fact, it says on my mind, I know Robin, you've been around. Almost as long as I have. And, you know, and we can actually read balance sheets. And it's, you know, a lot of these newer lenders, they just plug into the, the, the bank link. And I, I speak to the beatings. I, I just don't know that they actually even look at the financial center. So I guess the query there is just around, around the challenges of banks getting their data from the bank statement versus the financial system. Well, I don't think the bank's saying exactly at all, because I, I could have a ton of receipts or invoices or I haven't built out or whatever the case might be. Absolutely. Absolutely. So that, that's the story. You know, I'm a balance sheet kind of guy myself. But that's where the truth lies. So I think if there's a case to be presented by the bank, thanks statement. And then you can counter argue that with an actual, you know, good set of accounts. I think the, which set of accounts is weak. Yeah. So that's the challenge we've estimated. So don't hope that you play. Can I ask the, I'm just curious. I mean, this, this question could call for, for flat. But does anyone had a deal, uh, scuppered by a bank link? It's the information data from a bank link. No. There's not much for question. All right. But there's a slide. Yeah. Right. So what's happened then? It's just the, you know, when you look at the, when you look at the training over the 12 months. Yeah. They're looking for specific things related to, you know, the lowest points, high points. Yeah. Yeah. It's a romance point. Sometimes the bank statements not telling the actual story. Well, I mean, the bank statements show us the end of the month. They've got two dollars in the account. Yes. That's telling the story. Absolutely. Yeah. But, but raise right. I'm saying is they could have, they could have racked up an extra, they could have doubled their sales. They could have doubled their sales. Yeah. That's right. Well, it could be the opposite. Yeah. Absolutely. Okay. All right. Well, look, just before we sort of gather more questions, I just thought it might be good if we run down the panel and maybe talk about a success story. That's my start with your work. Just something where maybe you've got involved in it. It looked like a train wreck, but it's ended. And it happened. Yeah. So it tends to be confidential. Sorry. We don't want to know namespaces. And we are podcasting. So it is. Yeah. Yeah. Well, no. So there was, yeah. So it was an organization really that they had a lot of trouble with their bank. There was sort of a fractured relationship there. But ultimately, they had to underline contract issues. So they had to work through a process of actually actually getting out of contracts over a period of time. But they needed to do it under a specific program. And they had a lot of heat from there and come and bank and effectively wanting them to ultimately refinance. Let's call it what it was. And it's really the value of what we do. We have a lot of relationships and a lot of trust built up over many years with a lot of these finances. They got us involved in that particular scenario, which actually ended up giving this organization the breathing room. And actually a program was agreed by everyone set up. And again, it injected into that whole process, the whole trust element, which the bank can sit back and say, all right, we trust people who are actually in there for us. So it's sort of like we're a bridge between these two people. Ultimately, they're still undergoing their program. But the bank is set back and allowed them that time, allowed them that space. No more money, of course, which is often what happens in this situation. But fundamentally, if you break it down, really get with that whole process and their success throughout that came down to stakeholder management. They knew what their operational program needs to be, but if you don't have stakeholders on board with that, then, you know, it could all be for naught. So in that particular situation, it's still going, but it's in the back end of it now. So again, I mean, in these scenarios, I just can't express how important stakeholder management is because it really doesn't matter if you think you've got the best plan. If the people who matter aren't in the tent, aren't involved, aren't on board, then it can really not even matter. Well, I guess if you're talking, I mean, they're no scenarios. The person of the fuel company, the person of the bank, whoever it is you deal with, the agent, they're not the sales industry. They're the end where they're dealing with this every day and they've heard all the stories. Ben, what is, if you've got a scenario or a case where you can just tell us where maybe it's an M&A, maybe it's a turnaround where it's just been such a success. Everyone's knocked it out of the park and, you know, they're sending pickles a case of their campaign to help them celebrate. It's only enough. We've had a whole bunch, we call them retirement options, so in this industry, specifically, as I'm sure most of you would know, they're often, you know, kind of family run style businesses, particularly in that SME space. But, you know, for whatever reasons, there's no real genuine kind of succession plan that the kids haven't gone into it or whatever. And then, you know, the old man sick of, you know, driving trucks and dealing with drivers. You know, one of the key issues that we kind of haven't touched on a little bit has been the real problem with the shortage of drivers. And that's caused quite a lot of stress in the industry. And what we actually found was, so through COVID, we had all these fleets and asset prices that went up quite a bit. There was a problem getting drivers, fuel prices were up and then we had the corresponding interest rate rises. And quite a few, you know, those kind of SME family run businesses with no real succession plan. And she put their hand up and said, you know, well, my fleet's worth a small fortune. We've worked hard. We've paid it off. We don't know too much on it. We're going to put on a, you know, retirement option. I'm just going to get out of the industry. And it's a little bit like telling a story for us when we, when we conduct, and so we're selling, you know, fleet and equipment on a daily and a weekly basis. But when we get an event sale, and we can kind of put a bit of color, a bit of story around it, you know, so Joe blows retiring. You know, he's been in the industry for 30 years. He's maintained his fleet beautifully. And we put it all up as a package. We've had some really just enormous results over the last couple of years. And there's been quite a lot of those retirement type sales. And in those scenarios, one of the other things that we'll do is we'll offer a guarantee if we need to, to the client. So, you know, they're putting a lot, a lot on the line and also we'll guarantee a sale result of X for you. And then we'll, you know, share a bit of the overs or all those sorts of things. So there's a whole lot of things that we can do to make our client feel comfortable about the result that they're going to get at the end of the day. And I would refer people to some earlier podcasts this year where we've talked about selling your business and where, because this happens in the transport industry a lot where people, you know, that you think your business is worth a really high number. And so you hold out for that high number and then you're getting older and older and in the end, I guess, they're kind of saying, listen, just take it off my hands. And yeah, I've seen that plenty of times and I'm sure you had. And what about yourself from the success story where you parachuted in? Yeah, look, I've had a couple of really heartfelt appreciation of people with literally teasing their eyes saying that you've helped me to be able to sleep at night because I understand what's happening in my business now and I did it before. One of the times I've saved their marriage, the like is to do the accounts. But from a logistics point of view, the big ones for us have been reducing accounts receivable for one company by 60%. That was a huge huge turnaround and actually by automation, as opposed to people calling and doing silly things like that and increasing profitability as well. So we've had a client that was a smaller client, but they were running a six figure loss and we've turned them into a 10% profit scenario. So that was a huge turnaround for that business. So, yeah, absolutely, absolutely win on that one. Ben was talking about a lack of drivers and we saw a client of ours, the business was sold and I think part of the reason was it was during COVID. And the buyer, one of the trailers, one of the drivers, one of the drivers. Yeah. Do you want any of the contracts necessary? No, they had to work. Yeah. Do you sort of labor shortages, drivers? Yeah. Well, one of the funny ones, the first that just a company brought on board actually data for the agent fleet and their maintenance costs were through the roof and the drivers when we went off the vehicles. One of the things we encouraged them was to sell down their fleet and to sell their vehicles to their drives to retain them. So they went from, you know, having employees to becoming their own bosses and having their own trucks. And some contracting out there, their three-field business more and more from a frame in the last mile point to one of you. So, yeah, that was a good turnaround for us as an easy win. Well, I must say, from a Hermes perspective, you know, we, I was, I can't remember who I was talking to earlier, but a success story for us and we've had plenty of them is where we've got involved, when it might be dire strikes, you know, maybe someone who's been involved or maybe not. And nobody, no one's wanted to go near the business, but there's been some assets there. You can see that with the help of someone like yourself, the AR can be cleaned up because whilst we, we love a big AR, we want it to be a good AR, not like, you know, half of it's in 90 plus, it makes it a bit problematic. And, you know, well, don't go there. Yeah, don't go there. But, but, but, you know, so, so they've got themselves in a bit of strife, as I say, and, you know, and no one else will help them, we've been able to support them. And then after a year or two, the best thing you can have, whilst we want to keep our clients forever, of course, the best thing that happens is we find out we're being refenced by a major bank. And I always say, that's, that's a big win for us, that, that we've been part of that journey where, you know, started off as an asset-based scenario because that's, that's all they could get. And they've gone that journey and they've, they've tied themselves up, but I always say, with a team, it's not home, it's, but there's usually one or two really good advice is that we're partnering up. And I always say one of the things with home is to bring the tables apart from a sack of money is that we, well, I guess one of the reasons we do these things is to show that we are well connected. And we can help bring, bring the right partners to the table to solve a different piece of the problem, because it's always money. I mean, money is just, money's just where all the problems wash up, as, as Luke was saying before, you know, there's symptoms and there's causes and, and, you know, money can solve the symptoms, but you've still got to solve the underlying problems. So look, I will maybe just throw to the floor one more time. What I'll say is the best question, and I'll get, I'll get you to judge the best question. We'll, we'll, we'll get a hundred bucks towards lunch. A hundred bucks towards lunch at the Royal Exchange. We'll do the abouts, a hundred bucks. So, does anybody got another question that Dave won? Yeah. Yeah, it is quite topical. For me, I've just had a liquidation actually on per face in the West, and part of the fleet that we solve, there was four electric trucks, very, very low out. So we have, and they're not the first that we've had, but we've not seen a big huge amount of electric trucks come through. So I'll say there's a couple of things on there is the technology is definitely getting better, and the cost is coming down, you know, even six months ago. They were significantly, probably double the cost of the same equivalent of an ISO internal combustion engine vehicle. It's still got a way to go, for sure. And as is, as has happened, kind of in the electric motor vehicle sector is not being the adoption at the rates that everybody thought that there was, that there was going to be. So we've only had a small amount, so I haven't got a really huge sample size to talk about in terms of what their resale value is. But I'd say, I feel like there's more of a transition towards hybrids, hybrids is kind of going to really, really be where the industry is going to be for quite some time until the technology kind of improves. I guess it's interesting that, you know, to hear that the prices come off 50%, great if you're a buyer, but you know, pretty bad if you're a fanci or I suppose. I mean, I mean, many people funding electric trucks or electric vehicles, hybrids, okay, okay, that is. All right, well, that's a pretty good question. Can anybody talk about that? One of the things we're discussing when there's obviously issues, turn around problems, et cetera, is anybody we could use your services for business and actually doing okay for lack to improve. Or needs to make a decision in one of these areas that, you know, for example, how do they set their accounting out for what assets do we buy for running short of this longevity. So we're running down on time and just maybe just briefly where, just engagement, not for a distress scenario. Yeah, I mean, a growth scenario. Yeah, the principles are the same. Right. So it comes down to profitability. Normally, normally that's where sort of some of their issues have arisen. We did sort of operational turnarounds all the time. I think Roman would have been involved in plenty of that too. Yeah. So, and then your... Yeah, so most, so we, majority of our business actually, people's business is working for companies that are going very well. Particularly in industries like Transport and others where there's a heavy reliance on equipment. The best businesses are the ones that are continually turning over their older fleet and reinfigurating their fleet. It's one of the things I kind of didn't touch on before, but it can be a little bit of a trade with some of those older family run businesses where I'm never going to sell that. You know, for all those, because that's the one that I did my very first job on and that sort of stuff. So we're engaged with, you know, in size businesses and large businesses that are continually turning over their fleet. The other thing I'd encourage, particularly because there's been such a change in the market over the last, you know, kind of couple of years in terms of value and resale value is encouraging any of your clients to, you know, get up-to-date valuations and do that on a semi-regular basis. Yeah, we'll, yeah, John. We'd be like, "Dentice, my dentist wants me to get checked up every day." Yeah, yeah. Yeah. Well, I think, you know, sometimes, particularly transport, most operators are fairly keyed into the market. Like, they've got an idea of what their equipment's worth, but it's probably a little bit like a lot of us own. Well, and a lot of them are like we most of us are probably with our own homes. Everybody thinks your equipment or your home is probably worth, you know, more than absolute really might be. So you're not keeping up-to-date with those trends. You think you've got a big asset base here, but maybe it's not as big given what's happened over the last little while it's worth it. What you thought, or you might be pleasantly surprised, you know, you might be reading doom and gloom, you know, bit in the industry, and then we come along and do a valuation for you, and you go, "Well, actually, I've got a whole bunch of equity in here that I can possibly use." You said there's a bit of sunshine coming through after a bit of rust out there. Yeah, there is. Yeah, there is. Yeah, there is. Yeah, we operate a lot of problems. So, every visitor's going to say that they've got issues in their business. So, being in a position, though, where you're not bleeding, and you're doing okay, you can focus on things that are important in business. So, the earlier you get into that piece, the better. Especially when it comes to systems and processes, because if you've decided to build a 15-storey building, so to speak, you want to make sure the foundation's right. And then you scale to that 15-storey. You can't do all the sudden sight that you're going to build up a 15-storey on top of that. So, the earlier you get into the conversation about, and that's really when we come in and can do most of our work that's looking. Otherwise, inevitably, it comes to, we end up having to speak to someone like Lily to say, "Hey, how do we break it now so we can fix it again?" All right, well, we're going to wrap up the podcast. So, I think David, that was a crap record. Yeah, rip out. It was so good. It's so funny. As soon as you mention, maybe a bit of a grudge out to there. David, did you tell him that he's got to take us? We're including that. No, no, no, no, no, no, no, no, no, no, sorry. So, what I would like to say is, if you're listening to this podcast or for anybody in the room, I'd encourage you to go through our archive. We've had some great podcasts this year on getting a business ready to sell. We haven't talked about that, but we've covered that. You know, you talk about systems. It's important when someone wants to sell their business to make sure it's dressed up the right way. And I'm sure everybody could assist with that. And, you know, we've looked at restructuring and a bunch of stuff. So, I have a scroll through the Lunch Money podcast and I'm sure you'll find some more benefit there. So, I'm going to wrap it up by saying thank you to everybody for coming here today. Thank you to anyone who's listening to the podcast for watching our clips. And thank you very much to our panel. Thank you, everybody. Thanks, David. [MUSIC] [BLANK_AUDIO]
